Americans Plan to Use Tax Refunds to Pay Off Holiday Debt
Nearly two-thirds of American adults go into debt over the holidays, with one-quarter saying their debts reach over $500. With tax season around the corner, many Americans are planning to pay off that debt through tax refunds.
According to a new survey from Jackson Hewitt, 41% of taxpayers plan to apply their refunds toward holiday bills. This is up significantly from 31% last year. This option is most prominent among Generation Z, the youngest group of adults; 63% of Gen Z members say they “look forward to their tax refunds to pay holiday bills.”
The current government shutdown could put a temporary strain on those plans, depending on how long it lasts. The IRS does not start preparing for tax season until the end of January, so there won’t be any delays if the shutdown last less than two more weeks. If it continues through the month of January, refunds may be pushed back a few weeks for processing.
If you are relying on a tax refund to pay off a credit card, make sure you at least pay the monthly minimums for the time being. This will prevent a late payment from showing on your credit report. Once you receive the tax refund, you can repay the remaining balance.